Key players in the cryptocurrency and blockchain space are starting to expand into “security tokens." Unlike utility tokens, security tokens provide investors with an opportunity to harness the power of blockchain technology, while allowing for ownership of assets like real estate, bonds, equity or shares in a fund. Moreover, a key driving force behind security tokens is the reduction of regulatory risk, as security tokens fall under regulatory offering exemptions (e.g. Reg D or Reg S exemptions).

One key player leading the way for the expansion of security tokens is the crowdfunding giant, Indiegogo. Announced today, the global platform for entrepreneurs will now provide access to security tokens by offering a real-estate asset to its audience of crowd-investors.

Indiegogo will present its 10 million global members with the opportunity to own a tokenized share of common stock in the prestigious St. Regis Aspen Resort, via the Aspen Digital token asset offering. The offering will be available directly through Templum Markets LLC, an SEC registered broker-dealer and member of the Financial Regulatory Authority (FINRA). This security token offering (STO) will be filed under the SEC’s Reg D, Rule 506 (c), General Solicitation, and is open to accredited investors in the U.S. and overseas. Slava Rubin, Founder of Indiegogo, told me,

We have always strived to foster innovation and provide our users with access to some of the most novel and interesting products and ideas from around the world. With the blockchain revolution fully underway, we at Indiegogo are excited about the world-changing impact and potential of security tokens. Our goal is to provide an access point to our growing network of millions of customers. It’s a privilege to work with the St. Regis Aspen Resort.

Additionally, The St. Regis Aspen Resort (purchased by Elevated Returns in 2010) is conducting a single-asset real-estate investment trust (REIT) offering. This unique opportunity will apportion a minimum of $12 million USD for investment in security tokens. Each token of Aspen Digital represents indirect ownership, which is one share of common stock in the St. Regis Aspen Resort. Accredited Investors will be able to purchase “Aspen Coins” with U.S. dollars, as well as with Bitcoin (BTC) and Ether (ETH). Stephane de Baets, Founder and President of Elevated Returns, told me,

Security token offerings are the investment tool of the future, a mechanism designed to store wealth by utilizing income-producing digital assets. By opening access to investing in traditional assets like real estate, we are creating a new opportunity for investors to explore an ownership stake in something previously only accessible to private investors and high net worth individuals. Indiegogo is a well known and trusted name in alternative funding and cryptocurrency, making them an incredible partner for us to leverage their influence, experience and global audience.

Benefits Of Security Tokens

Of course, one of the main benefits behind security tokens is the opportunity for investors to take ownership in shares of common stock that were only previously accessible to private investors. According to the Security Token Academy, the tokenization of global assets presents a huge potential opportunity. Global equity assets are valued at about $70 trillion, with debt around $100 trillion, and real estate about $230 Trillion (about $180 Trillion in residential, $32 Trillion in Commercial, and the balance in agricultural, etc.).

And while raising money via ICOs was all the rage in 2017, the tokenization of existing assets via security tokens seems to be a new era for the crypto community - one that will likely start to emerge in the coming year. According to Rubin, security tokens are just now starting to scratch the surface.

This year alone has already seen hundreds of millions of dollars worth of security tokens being sold in primary issuances. We believe this number is just scratching the surface, and as more pillars for maturity come online (such as qualified custodians and secondary trading exchanges) -- the appetite for issuing security tokens and investing in them will rise in correlation. One area we see poised for significant growth is in the asset-backed security token, similar to what Aspen Digital is offering today. Historically these assets, such as real estate, loans, and investment vehicles, have always struggled to find fluid liquid markets. Opening these areas to tokenization and fractional ownership deepens the liquidity opportunity and opens these opportunities to a whole new class of investors.